Labour market data surprised to the upside

16.12.2016

Slight acceleration of wage growth in November

In accordance with GUS data published today, nominal wage dynamics in the sector of enterprises employing more than 9 persons increased to 4.0% YoY in November vs. 3.6% in October, running above our forecast (3.8%) and the market consensus (3.9%). In real terms, price-adjusted corporate wages rose by 4.0% YoY in November vs. 3.8% in October.

As we expected last month, the decline in wage dynamics in October turned out to be only temporary (see MACROpulse of 18/11/2016). Conducive to an increase in nominal wage growth between October and November was inter alia the favourable difference in the number of working days (in October 2016 the number of working days was lower by 1 than in 2015, while in November 2016 it was the same as the year before) supporting the growth of pay for piecework.

Strong increase of employment

According to GUS data, corporate employment rose by 12.4k MoM in November vs. a 7.6k increase in October. It was the sharpest monthly increase of employment in November recorded since 2007. In effect, the annual employment dynamics did not change compared to October and amounted to 3.1% YoY in November. We maintain the view that employment dynamics reached the local maximum in Q3 and we expect that from Q4, the annual employment growth rate will start to gradually decrease as enterprises face large difficulties in finding skilled labour. Moreover, according to the "Survey regarding the labour market” report released by NBP this week, the employment growth is limited also by the excessive – compared to current market conditions – salary expectations of the unemployed persons. Gradual slowdown in employment growth will be in line with our scenario assuming that Polish labour market will achieve equilibrium in 2017 (see MACROmap of 12/12/2016).

Slight downward risk to consumption growth rate in Q4

November data on employment and wages in the enterprise sector confirm that recovery in the labour market continues. Nevertheless, the real wage fund growth (employment times average wages) in enterprises dropped to 7.1% YoY in October-November period vs. 8.6% in Q3. Slowdown in real wage fund growth signals downside risk to our forecast of private consumption dynamics in Q4 2016 (3.9% YoY).

Wage and employment data slightly positive for PLN and bond yields

In our view, today's data on average wages and corporate employment in November are slightly positive for PLN and bond yields.